Trumbauer Incorporated makes a single product--an electrical motor used in many long-haul trucks.The company has a standard cost system in which it applies overhead to this product based on the standard machine-hours allowed for the actual output of the period.Data concerning the most recent year appear below: The fixed overhead volume variance is:

A) $18,482 U
B) $18,482 F
C) $31,482 U
D) $31,482 F

Question

Trumbauer Incorporated makes a single product--an electrical motor used in many long-haul trucks.The company has a standard cost system in which it applies overhead to this product based on the standard machine-hours allowed for the actual output of the period.Data concerning the most recent year appear below:

The fixed overhead volume variance is:

A) $18,482 U
B) $18,482 F
C) $31,482 U
D) $31,482 F

Benjamin Rivera · Accepted Answer

Final Answer : C, Explanation :  Fixed component of the predetermined overhead rate = $157,410/27,000 machine-hours= $5.83 per machine-hourVolume variance = Budgeted fixed overhead - Fixed overhead applied to work in process= $157,410 - ($5.83 per machine-hour × 21,600 machine-hours)= $157,410 - ($125,928)= $31,482 UorVolume variance = Fixed component of the predetermined overhead rate x (Denominator hours - Standard hours allowed for the actual output)= $5.83 per machine-hour x (27,000 machine-hours - 21,600 machine-hours)= $5.83 per machine-hour x (5,400 hours)= $31,482 U

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